Good morning to all of u. presented by:-Lishma Soni by:Nancy Parveen jain Ravesh Divya.

MRP is a technique of determining the requirement for raw material components,& spare parts etc required for manufacturing products. if delievery date of product is known then everything can be planned very easily like time required or quality of material required etc.

Material requirement planning is a system used for planning the future requirement of dependent demand items.this planning is done on three inputs:inputs:-

Inputs in MRP.
No. of items already in the inventory (inventory status). No. of finished goods to be produced in the near future using these items. No.of units of the item required for manufacturing a single unit of the finished product.

Inputs of MRP

Bill of material is a document which tells us about an item s product structure,showing the sequence in which components are assembled & their required also contain detailes about the workstations at which the items is assembled.

Master production schedule.
An aggregate production plan tells us how many units of a product have to be manufactured in the coming 6-18months 6on a weekly or monthly basis.

Inventory status.
It tells us about the status of the inventory of an items at present,or in a given interval of time in the coming future.this includes scheduled receipts of units of items in the interval of time as a result of orders placed in the recent past to suppliers.the inventory status files also contain details about the suppliers of the items,the lead time taken by him to supply the item,& the size of each order to be placed to him.

Outputs in MRP
Planned orders report Orders release report Order changes report

Planned order report
This report gives information about planned orders to be released on some future date during a given interval of time. it is helpful in preparing for the funds required for the payments to the suppliers in the future according to the dates & order sizes.

Order release report
This report gives the information about planned orders to be released on the present helps the purchse manager to release purchase order to the suppliers.

Order change report
Open order are those which have been placed in the past,& the suppliers of the items is preparing for these suppliers to be made to the company.during the lead time the MPS of the company may fluctuate.

Appropriate use of material so that less wastage is incurred. Availability of material at right time. Optimum utilization of working capital. More efficiency,more productivity. No delay in the delievery of products. Efficient working of production.

Saving in the form of time & money. Minimize the cost of production. Continues flow of control. 

Seasonal Inventory  Decoupling Inventory  Cyclic Inventory  Pipe line Inventory  Safety Stock

Seasonal Inventory:- Organizations Inventory: carry inventory to meet fluctuations in demand arising out of seasonality. In order to meet the demand, inventory build up happens during non-peak periods. nonDecoupling Inventory:- Manufacturing Inventory: systems typically involve a series of production and assembly workstations. One way to simplify the production planning and control problem is to decouple successive stages using inventory at some intermediate points.

Cyclic Inventory:- It is customary for Inventory: organizations to order inventory in repeated cycles and consume them over time. Each cycle begins with replenishment and ends with complete depletion of the inventory. Pipeline Inventory:- It pertains to the level of Inventory: inventory that organizations carry in the long run due to non-zero lead time for order, transport and nonreceipt of material from the suppliers. Safety Stock:- Organizations also have Stock: additional investment in inventory to buffer against uncertainties in demand and supply of raw material and components. In order to improve the

There are several costs associated with inventory planning and control. These costs could be classified under three broad categories. 

Inventory Carrying Cost 

Cost Of Ordering  Cost Of Shortages

Inventory Carrying Cost:- ICC includes cost of Cost: stores and warehousing and administrative costs. The other ICC includes insurance costs, cost of obsolescence, damages and wastage. The components of ICC exert considerable pressure on an organization to keep inventory to low levels. Cost Of Ordering:- Organizations perform a series Ordering: of tasks related to ordering material. These includes search and identification of appropriate sources of supply, price negotiation, contracting and purchase order generation, follow-up and receipt of material. followAll these involve manpower, resources and time that could be classified under cost of ordering. Cost of Shortages:- Despite careful planning, it is Shortages: likely that organizations run out of stock. It also introduces additional costs arising out of pushing the order back and rescheduling the production

Let us consider a situation in which the demand for an item is continuous and is known with certainty. Since demand is known, we exclude the possibility of having shortages. Better inventory control requires that we answer the how much and when questions by balancing the total costs of carrying inventory and ordering. TC(Q)=



D C0

Organizations employ some methods to manage and control inventory.
Continuous Review (Q) System The Periodic Review (P) System

Continuous Review (Q) System Organizations widely use a continuous review system called a two-bin system. In twooperation, the available inventory is stocked in two bins, first in a smaller bin and the balance in a larger bin. As the material in consumed, the larger bin is emptied first. As soon as the larger bin is empty, an order is placed with a supplier for a predetermined quantity, Q, and until the material arrives in

The Periodic Review (P) System An alternative model for inventory control, known as periodic review system, operates differently from the Q system. In a periodic review system, the inventory level in the system is reviewed at fixed intervals of time. Therefore, these systems are also known as fixed order interval systems. In P system, the two decisions when and how much are made in a different fashion compared to the Q system.

Managing inventory is an issue pertaining to a large no and variety of items. Organizations, therefore, devise suitable ways of categorising the items and adopt mechanisms that have variable levels of control on the different categories of items. ABC Classification :- The ABC classification of inventories is based on the cost (or value) of items consumed. Very high value items are A class items and may require tighter control. Medium value items are categorised as B class and the low value

On the basis of unit cost of the item(XYZ classification)
a) High unit cost (X Class item) b) Medium unit cost (Y Class item) c) Low unit cost (Z Class item)

On the basis of movement of inventory(FSN classification)
a) Fast moving b) Slow moving c) Non-moving Non-

On the basis of criticality of items(VED classification)
a) Vital b) Essential c) Desirable

On the basis of sources of supply
a) b) c)

Imported Indigenous( National suppliers) Indigenous( Local suppliers)

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